Collector of Customs v Pozzolanic Enterprises Pty Ltd

[1993] FCA 456

COLLECTOR OF CUSTOMS v. PRESSURE TANKERS PTY LTD and POZZOLANIC ENTERPRISES
PTY LTD
Nos. QG201 and QG202 of 1992
FED No. 456
Number of pages - 22
Administrative Law - Customs and Excise
(1993) 115 ALR 1
(1993) 18 AAR 9
(1993) 43 FCR 280

COURT

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Neaves(1), French(1) and Cooper(1) JJ

CATCHWORDS

Administrative Law - Administrative Appeals Tribunal - question of law or fact - rules for characterisation - appeal to Federal Court.

Customs and Excise - diesel fuel rebate - stock feed cartage contractor - transport and unloading of stock feed - unloading of stock feed into automatic live-stock feed system - whether connected with rearing of live-stock - "connected with" - construction - application in accordance with policy of Act - whether question of law or fact - application of rebate provisions - intended use of fuel - assessed at point of purchase - how assessed - multiple purposes.

Words and Phrases - "connected with" - "the rearing of live-stock"

Customs Act 1901 (Cth) s.164

Excise Act 1901 (Cth) s.78A

Administrative Appeals Tribunal Act 1975 (Cth) s.44

Abbott Point Bulk Coal Pty Ltd v. Collector of Customs (1992) 35 FCR 371

Australian National Railways Commission v. Collector of Customs (1985) 8 FCR 264

Collector of Customs v. Cliffs Robe River Iron Associates (1985) 7 FCR 271

Collector of Customs v. Davis (1989) 23 FCR 378

Jaensch v. Coffey (1984) 155 CLR 549

Waterford v. The Commonwealth (1987) 163 CLR 54

Commissioner of Taxation v. Brixius (1987) 16 FCR 359

Blackwood Hodge (Australia) Pty Ltd v. Collector of Customs (1980) 47 FLR 131

Federal Commissioner of Taxation v. Cainero (1988) 88 ATC 4427

Repatriation Commission v. Thompson (1988) 82 ALR 352

Lennell v. Repatriation Commission (1982) 4 ALN N.54

Freeman v. Defence Force Retirement and Death Benefits Authority (1985) 5 AAR 156

Repatriation Commission v. Bushell (1991) 13 AAR 176

Politis v. Federal Commissioner of Taxation (1988) 16 ALD 707

Jedko Game Co. Pty Ltd v. Collector of Customs (1987) 12 ALD 491

Brutuz v. Cozens (1973) AC 854

NSW Associated Blue Metal Quarries Ltd v. Federal Commissioner of Taxation (1956) 94 CLR 509

Life Insurance Co. of Australia Ltd v. Phillips (1925) 36 CLR 60

Neal v. Secretary, Department of Transport (1980) 29 ALR 350

Australian Gas Light Co. v. Valuer General (1940) 40 SR(NSW) 126

Lombardo v. Federal Commissioner of Taxation (1979) 28 ALR 574

Hope v. Bathurst City Council (1980) 144 CLR 1

Hayes v. Federal Commissioner of Taxation (1956) 96 CLR 47

TNT Skypak International (Aust) Pty Ltd v. Federal Commissioner of Taxation (1988) 82 ALR 175

Federal Commissioner of Taxation v. Bivona Pty Ltd (1990) 21 FCR 562

Commissioner of Taxation v. Cooper (1991) 29 FCR 177

Elna Australia Pty Ltd v. International Computers (Aust) Pty Ltd (No. 2) (1987) 16 FCR 410

Munchies Management Pty Ltd v. Belperio (1988) 84 ALR 700

Deputy Commissioner of Taxation v. Stewart (1984) 154 CLR 385

HEARING

BRISBANE, 4 May 1993

#DATE 9:7:1993

Counsel for the Appellant: Mr F. Redmond

Solicitors for the Appellant: Australian Government Solicitor

Counsel for the Respondents: Mr P. McMurdo QC

Solicitors for the Respondents: Sly Weigall Cannan and Peterson

ORDER

The Court orders that:

1. The appeal be allowed.

2. The orders made by the learned trial judge be set aside and in lieu thereof orders that:

(i) The application be dismissed.

(ii) The applicant pay the respondent's costs of the application.

3. The respondent pay the appellant's costs of the appeal.

Note: Settlement and entry of Orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

Introduction

NEAVES, FRENCH AND COOPER JJ The feeding of live-stock in modern farming practice is a highly automated process. In one commonly used system mill-produced feed held in silos adjacent to live-stock sheds is conveyed automatically to bins located in the sheds and then through small augers to individual feeding bowls. The bins are replenished automatically from the silos via an electrical sensing system. The silos are filled from trucks which unload their product using a rotary suction delivery system powered by diesel fuel from the trucks' own tanks. For some years cartage contractors distributing stock feed in this way to farms in central and northern New South Wales have claimed and been allowed rebates of customs and excise duty payable on diesel fuel used in the process of loading the feed into the farm silos. The rebates have been claimed on the basis that the fuel so consumed is being used "in primary production" within the meaning of the rebate provisions of the Customs Act 1901 (Cth) and the Excise Act 1901 (Cth). More particularly, the rebates have been claimed on the basis that the unloading operation is connected with the rearing of live-stock within the meaning of those Acts. In August 1991, claims for rebates in respect of fuel purchased prior to May of that year were disallowed by a delegate of the Collector of Customs. Two contractors, Pozzolanic Enterprises Pty Ltd and Pressure Tankers Pty Ltd, sought review of the disallowances in the Administrative Appeals Tribunal but the Tribunal affirmed the disallowance decisions. The contractors appealed and succeeded before a single judge of this Court who set aside the Tribunal's decisions and remitted the cases to the Collector of Customs for reconsideration. The Collector now appeals to this Full Court against the decisions of the learned primary judge. The factual circumstances of the two appeals are substantially the same and it is common ground that the outcome of one will determine the outcome of the other. The facts as set out in this judgment relate to Pozzolanic Enterprises Pty Ltd.

Factual Background
2. Pozzolanic Enterprises Pty Ltd ("Pozzolanic") is a cartage contractor which transports mill produced stock feed to farms around Sydney and Tamworth and to other places in New South Wales. The company carries on its cartage business under the name John Goth and Co., having acquired the assets of a company of that name on 2 April 1990. Its corporate predecessor, John Goth and Co. Pty Ltd, had been engaged in the delivery of bulk stock feeds continuously since 1966. Pozzolanic owns a fleet of trucks which make the deliveries. Orders for feed to be delivered are placed in various ways. Sometimes an order is placed by a feed mill operator who has received an order for a quantity of feed from a farmer. Sometimes a farmer will order feed direct from the company's office. The farmer's order, whether placed directly with the feed mill or through the company, specifies to the feed mill the amount and type of stock feed required. Upon receipt of an order the Pozzolanic truck goes to the feed mill where the amount and type of feed ordered is loaded and the truck sealed with a numbered seal. The truck then takes the feed directly to the farm where the farmer or his manager or some other representative inspects the seal for interference. The inspection having been completed, the driver is then allowed to proceed to the feed storage silos to unload the feed. It is evidently the invariable practice that the driver is directed to specified silos, each associated with a particular live-stock shed, and told to deposit specified quantities of feed in each silo. The farmers to whom the company delivers have feed storage silos adjacent to sheds in which the live-stock live and that is the case whether the live-stock in question are cattle, poultry or pigs. Each silo has a capacity of 26 tonnes and has two sides into which different types of feed can be introduced. On a poultry farm for example, one side of the silo might take starter feed for very young chickens, while the other will have grower feed for older birds. The feed is unloaded on average into four silos per farm.

1. Feed deposited in the storage silo is distributed via an auger to a bin inside the feeding shed. Small distribution augers convey feed from the bin to feeding bowls located at various points along them. The animals feed from the bowls. As feeding takes place the level of feed in the bin drops. When it reaches a low level switch located in the bin more feed is automatically drawn off the silo. A high level switch in the bin operates as a sensor to prevent further feed being drawn off after the bin has been replenished.

2. The bulk of the stock feed (95%) delivered by Pozzolanic is consumed by pigs and poultry. The remainder is eaten by cattle. There is no real alternative to mill produced feed for pigs and poultry. Silo stock feeding is regarded as more hygienic and controllable than other methods. Significant productivity increases have been reported by farmers using constantly full feed bowls, superior food stuff and the more compact farming operations achievable with this method.

3. The transfer of feed from truck to silo depends upon a rotary suction process and upon the kind of trailer which is fitted to the truck. There are rotary valve hopper trailers of which Pozzolanic has six, and rotary valve tipper trailers of which it has seven. With the rotary valve hopper trailer, the driver is required, among other things, to connect a delivery hose from the hopper outlet to the silo fill pipe. To commence discharge it is necessary, after further preparatory steps, to select a requisite number of revolutions per minute, close an atmosphere valve and engage the power take off and starter motor which operates the rotary valve. The product slide or quadrant is opened and product is then discharged into the silo. Drivers are required to remain with their vehicles during the entire unloading procedure. A similar process is followed where a rotary valve tipper trailer is used. The unloading apparatus uses diesel fuel from the truck's fuel tank. The rebate is claimed only in respect of the fuel used in the unloading operation.

4. From 18 August 1982 to 1 March 1991, the diesel fuel rebate claimed by Pozzolanic and its corporate predecessor, John Goth and Co. Pty Ltd, was paid without dispute. On 30 May 1991, Pozzolanic lodged an application for a rebate of $1,051.78 in respect of 4,150 litres of diesel fuel used for feed unloading in January, February and March 1991. On 1 August 1991, Mr S. Bryant of the Australian Customs Service, a delegate of the Collector, wrote to Pozzolanic informing it that advice had been received from the central office of the Service to the effect that delivery of chicken feed to farmers by blowing it into storage facilities was "too far removed from agricultural activities" to qualify for the rebate. The company was informed that the last claim, received on 30 May 1991, had been cancelled and that no future claim for diesel fuel rebate would be met for that kind of operation.

5. On 28 August 1991, Pozzolanic applied to the Administrative Appeals Tribunal for a review of Mr Bryant's decision. On 19 August 1992, the Tribunal, comprising Mr D.W. Muller, Senior Member and Mr Horrigan and Captain Keane as members, affirmed Mr Bryant's decision. On 18 September 1992, Pozzolanic instituted an appeal against that decision in the Federal Court. After a hearing on 25 November 1992, Drummond J allowed the appeal on 30 November, set aside the decision of the Tribunal and remitted the matter to the Collector of Customs for reconsideration. An appeal on virtually identical facts by Pressure Tankers Pty Ltd was allowed for the same reasons. The Collector now appeals to this Court against the decisions of Drummond J in these matters.

Statutory Framework
8. The rebate is payable under the Customs Act 1901 (Cth) or the Excise Act 1901 (Cth), depending on whether the fuel has been imported and subject to customs duty, or locally produced and subject to excise duty. The rebate provisions of each of the Acts are in identical terms and it is convenient for present purposes to set out the relevant parts of s.164 of the Customs Act 1901. The equivalent provision of the Excise Act 1901 is s.78A. Section 164 of the Customs Act 1901 provides, in the relevant parts:

"164(1) A rebate is, subject to subsections (2) and

(3) and to such conditions and restrictions as are prescribed (being conditions and restrictions that relate to goods generally, to goods included in a class of goods that includes diesel fuel or to diesel fuel only), payable to a person who purchases diesel fuel for use by him:

...

(aa) in primary production (otherwise than for the purpose of propelling a road vehicle on a public road); ..."

1. The concept of primary production is elaborated in s.164(7) which provides that:
   

""primary production" means:

(a) agriculture;

(b) fishing operations; or

(c) forestry."

1. The term "agriculture" is defined in sub-s.(7) as follows:
   

""agriculture" means:

(a) the cultivation of the soil;

(b) the cultivation or gathering in of crops; or

(c) the rearing of live-stock;

and includes:

(d) viticulture, horticulture, pasturage or apiculture;

(e) hunting or trapping carried on for the purpose of a business; or

(f) other operations (including operations by way of pest or disease control or by way of soil or water conservation) connected with any operations referred to in paragraph (a), (b), (c), (d) or (e); but does not include fishing operations or forestry;"

1. Live-stock is also defined:
   

""live-stock" includes any animal reared for the production of food, fibres, skins, fur or feathers or for its use in the farming of land;"

The Tribunal's Reasons for Decision
12. The Tribunal found the various facts set out above which describe the general nature of Pozzolanic's operation, the way in which stock feed ordered by a farmer is delivered into specified silos on the farm and the way in which it is drawn from the silos into feeding bowls. The rebate being payable under the provisions of s.164(1) of the Customs Act 1901 or s.78A of the Excise Act 1901, the Tribunal set out the relevant parts of s.164. It identified the issue for determination as whether or not the operation of unloading stock feed from the truck to the storage silos is an operation connected with the rearing of live-stock for the purpose of the statutory rebate provisions. The Tribunal said that such cases always involve a question of degree and where to make the cut-off point. It adopted, for the purposes of the cases before it, the observations of Ryan and Cooper JJ, in Abbott Point Bulk Coal Pty Ltd v. Collector of Customs (1992) 35 FCR 371 at 378 which referred to the need to take "a commonsense and commercial approach ... to the question having regard to the evident purpose of the legislation...". The Tribunal then went on:

"... We believe that, having regard to the evident purpose of the legislation, and taking a commonsense and commercial approach, the unloading of the feed from the trucks to the silos is part of the process of manufacture, distribution, haulage and delivery of stock feed. It is true that the truck drivers deliver the feed to the silos designated by the farmer, but they are not the agents of the farmer..."

1. It referred to a decision of a Full Court of this Court in Australian National Railways Commission v. Collector of Customs (1985) 8 FCR 264 which considered the application of the rebate to the transport of live-stock from one area to another to eradicate disease, the transport of fertiliser from point of manufacture to country stations or depots and the transport of grain from country silos to storage depots in the vicinity of ports. The Tribunal concluded:
   

"13. The payment of a rebate of duty in the circumstances of this case may help in some small degree to promote the manufacture and distribution of the applicant's stockfeed but it is stretching commonsense to say that it would promote primary production. We have taken the view that the applicant is not an entity which has purchased diesel fuel for use by it in primary production. The fuel was purchased for use in the manufacture, distribution and delivery of stockfeed. The operation the subject of this review is part of that distribution and delivery process. It is not sufficiently connected to the rearing of livestock to bring it within the definition of 'primary production'."

The Primary Judge's Reasons
14. The primary judge recited the bulk of the Tribunal's findings of fact and noted that the claim for rebate was in respect only of that part of the diesel fuel used in the unloading operation on the farm at the point of delivery. After referring to the rival contentions and the Tribunal's conclusions, his Honour identified the question of law for determination in the appeal. That was whether, on the facts found by the Tribunal, the unloading operations were "connected with" the rearing of live-stock on the proper construction of the term "connected with" in s.164(7)(f) of the Customs Act. He relied upon the decision of this Court in Australian National Railways Commission v. Collector of Customs (supra) at 277 for the proposition that this is an appealable question of law.

1. His Honour accepted that, in deciding whether a particular activity falls within the definition of "primary production" in s.164(7), a commonsense and commercial approach had to be taken. The relevant provision was not to be given a narrow application and in this respect he invoked Collector of Customs v. Cliffs Robe River Iron Associates (1985) 7 FCR 271 at 275. He observed that, in deciding whether the unloading operation was "connected with" the rearing of live-stock, a judgment had to be made whether one operation was sufficiently proximate to the other to enable it to be said that they were "connected". Here both physical and temporal proximity were, he said, of relevance. Referring to the system of delivery of the feed, his Honour said it was difficult to think of any activity more directly associated with the rearing of live-stock than the day-by-day provision of feed to the stock. The use by farmers of automatic feeding systems was an activity which itself formed part of the rearing of live-stock and not merely an activity connected with that rearing. He characterised the unloading operations of the Pozzolanic trucks as comprising "the first step in a discrete process or system that conveys the feed to the farmers' live-stock" (at 9). He saw the operations as an integral part of a process that all takes place on a farm which involves the delivery of hygienic grain feed to live-stock for consumption. Specialised equipment was fitted to the trucks and was involved in the transfer of the feed to the feeding system. The operations were much more intimately associated with the rearing of live-stock than delivery by a carrier of feed to a stand-alone storage facility on a farm from which the farmer draws off feed as and when he needs it.

2. His Honour distinguished the Australian National Railways Commission case on the facts. So far as it dealt with the transport of fertiliser by the Commission, that transport ended at the Commission's sidings from which farmers had to pickup fertiliser delivered to that point by the Commission. The unloading operation in the present cases was, in his Honour's view, "much more proximate to primary production by way of the feeding of live-stock than was the delivery of fertiliser to rail sidings to primary production by way of the application of that fertiliser to growing crops." In the event, it was on the basis of the intimate connection between the unloading operation and the feeding of live-stock and thus with primary production that his Honour took the view that the unloading was connected with the rearing of live-stock and therefore "in primary production" for the purposes of s.164 and s.78A of the Customs Act and Excise Act respectively.

Contentions on Appeal
17. It was put by all parties that the only issue raised by each appeal from the Tribunal to his Honour was whether or not the unloading of stock feed from the trucks to the silos was an operation connected with the rearing of live-stock. The Collector submitted that the Australian National Railways Commission case indicated that the statutory provisions required a judgment to be made about the "proximity" of the operation under review and the rearing of live-stock. Reference was made to Collector of Customs v. Davis (1989) 23 FCR 378 in support of this interpretation of the Australian National Railways Commission case. Expositions of the concept of proximity in the common law of negligence set out in the judgment in Jaensch v. Coffey (1984) 155 CLR 549 were relied upon. The learned primary judge was said to have failed expressly to consider the question of proximity. He had adopted as the relevant test whether the unloading operation was "intimately bound up with" the rearing of live-stock. His Honour, however, had not had sufficient regard to the overall operation which was part of a process of manufacture, distribution, haulage and delivery of stock feed. His reliance upon what was said to be "causal proximity" involved a failure to consider spatial and temporal proximity. Spatial and temporal proximity to end use was said to be necessarily involved in the transportation of goods. It was said to be implicit in the approach taken by his Honour that the fuel was purchased for more than one purpose. The question then arose on what basis is the rebate to be granted. If a primary purpose test were to be adopted, then, in these cases, the primary purpose of the purchase was the distribution, haulage and delivery of the stock feed.

1. The respondents submitted that the rebate provisions do not prescribe any proximity test. They pointed out that his Honour expressly adopted a proximity criterion and accepted the relevance of both physical and temporal factors. The submission that his Honour had regard to the use to which the fuel was put rather then the purpose for which it was purchased was rejected and the point made that his Honour had explicit regard to purpose in his judgment. The respondents also took issue with the Collector's description of the automatic feeding system as "a transport operation". His Honour had correctly described the operation as the rearing of live-stock. The argument as to multiple purpose purchases was met with the contention that it was a mis-statement of his Honour's reasons. He had referred to the unloading operations as having a dual character and correctly identified the question for determination as being whether the requisite connection existed between the unloading operation and the feeding of live-stock.

A Question of Law or Fact?
19. The jurisdiction invoked by the respondents in the proceedings before his Honour was that conferred by s.44(1) of the Administrative Appeals Tribunal Act 1975 (Cth) which provides:

"A party to a proceeding before the Tribunal may appeal to the Federal Court of Australia, on a question of law, from any decision of the Tribunal in that proceeding."

1. The limitation of the jurisdiction to the resolution of questions of law imposes a significant constraint upon the role of the Court in reviewing decisions of the Tribunal. The appealable error of law must arise on the facts found by the Tribunal or must vitiate the findings made or must have led the Tribunal to omit to make a finding it was legally required to make. A wrong finding of fact is not sufficient to demonstrate error of law - Waterford v. The Commonwealth (1987) 163 CLR 54 at 77-78. Where the decision of the Tribunal involves matters of fact and degree, then provided it applies correct principles of law, no appeal will lie - Commissioner of Taxation v. Brixius (1987) 16 FCR 359 at 365.

2. The limits within which the jurisdiction is conferred require that it be exercised with restraint. Only in exceptional circumstances should the decision of the Tribunal not be the final decision - Blackwood Hodge (Australia) Pty Ltd v. Collector of Customs (1980) 47 FLR 131 at 145 (Fisher J); Federal Commissioner of Taxation v. Cainero (1988) 88 ATC 4427 (Foster J). As the Full Court said in Repatriation Commission v. Thompson (1988) 82 ALR 352 at 357:
   

"... the nature of the task of this court is clear. It is to leave to the tribunal of fact decisions as to the facts and to interfere only when the identified error is one of law."

1. This translates to a practical as well as principled restraint. The Court will not be concerned with looseness in the language of the Tribunal nor with unhappy phrasing of the Tribunal's thoughts - Lennell v. Repatriation Commission (1982) 4 ALN N.54 (Northrop and Sheppard JJ); Freeman v. Defence Force Retirement and Death Benefits Authority (1985) 5 AAR 156 at 164 (Sheppard J); Repatriation Commission v. Bushell (1991) 13 AAR 176 at 183 (Morling and Neaves JJ). The reasons for the decision under review are not to be construed minutely and finely with an eye keenly attuned to the perception of error - Politis v. Federal Commissioner of Taxation (1988) 16 ALD 707 at 708 (Lockhart J).

2. The principles according to which the jurisdiction conferred by s.44 is limited are not always easy of application. Distinctions between a question of fact and a question of law can be elusive. The proper interpretation, construction and application of a statute to a given case raise issues which may be or involve questions of fact or law or mixed fact and law. Nevertheless there are five general propositions which emerge from the cases:
   

1. The question whether a word or phrase in a statute is to be given its ordinary meaning or some technical or other meaning is a question of law - Jedko Game Co. Pty Ltd v. Collector of Customs (1987) 12 ALD 491; Brutus v. Cozens

(1973) AC 854.

2. The ordinary meaning of a word or its non-legal technical meaning is a question of fact - Jedko Game Co. Pty Ltd v. Collector of Customs (supra); NSW Associated Blue Metal Quarries Ltd v. Federal Commissioner of Taxation (1956) 94 CLR 509 at 512; Life Insurance Co. of Australia Ltd v. Phillips (1925) 36 CLR 60 at 78; Neal v. Secretary, Department of Transport (1980) 29 ALR 350 at 361-2.

3. The meaning of a technical legal term is a question of law. Australian Gas Light Co. v. Valuer General (1940) 40 SR(NSW) 126 at 137-8; Lombardo v. Federal Commissioner of Taxation (1979) 28 ALR 574 at 581.

4. The effect or construction of a term whose meaning or interpretation is established is a question of law - Life Insurance Co. of Australia v. Phillips (supra) at 79.

5. The question whether facts fully found fall within the provision of a statutory enactment properly construed is generally a question of law - Hope v. Bathurst City Council (1980) 144 CLR 1 at 7 per Mason J with whom Gibbs, Stephen, Murphy and Aickin JJ agreed; Australian National Railways Commission v. Collector of Customs

(supra) at 379 (Sheppard and Burchett JJ).

1. The fifth proposition as stated by the High Court in Hope v. Bathurst City Council (supra) was elaborated by reference to the remarks of Fullagar J in Hayes v. Federal Commissioner of Taxation (1956) 96 CLR 47 at 51:
   

"Where the factum probandum involves a term used in a statute, the question whether the accepted facta probantia establish that factum probandum will generally - so far as I can see, always - be a question of law."

1. This principle is qualified when a statute uses words according to their ordinary meaning and the question is whether the facts as found fall within those words. Where it is reasonably open to hold that they do, then the question whether they do or not is one of fact - Hope v. Bathurst City Council (supra) at 8. Mason J there cited the observation of Kitto J in NSW Associated Blue Metal Quarries Ltd v. Federal Commissioner of Taxation (supra) at 512:
   

"The next question must be whether the material before the Court reasonably admits of different conclusions as to whether the ... operations fall within the ordinary meaning of the words as so determined; and that is a question of law... If different conclusions are reasonably possible, it is necessary to decide which is the correct conclusion; and that is a question of fact;..."

1. See also Australian Gaslight Co. v. Valuer-General (supra) at 137 (Jordan CJ); Lombardo v. Federal Commissioner of Taxation (supra) at 576 (Bowen CJ), 581 (Franki J); TNT Skypak International (Aust) Pty Ltd v. Federal Commissioner of Taxation (1988) 82 ALR 175 at 182 (Gummow J); Federal Commissioner of Taxation v. Bivona Pty Ltd (1990) 21 FCR 562 at 564; Commissioner of Taxation v. Cooper (1991) 29 FCR 177 at 194-195 (Hill J).

2. In Collector of Customs v. Davis (supra), Beaumont J rejected an objection to the competency of an appeal from the Administrative Appeals Tribunal in a case involving the rebate of duty on diesel fuel. The question was whether, on undisputed facts, fuel was used for the "cultivation or gathering in of crops" within the meaning of s.164(7)(b) of the Customs Act 1901. His Honour observed at 382:
   

"In the present case, it is not suggested that any of the material terms of the legislation have any special meaning. It follows their ordinary meaning should be treated as a question of fact. On the other hand... can it be said that the evidence before the Tribunal 'reasonably admits of different conclusions as to whether the ... operations fall within the ordinary meaning of the words as so determined?' If so, a question of law is involved."

1. That observation concerned the construction of the words "cultivation or gathering in of crops", a description of a range of operations, the construction of which, according to their ordinary meaning, is a matter of fact. And the question whether a set of facts to which those words are capable of applying do fall within their range is also a question of fact. But the phrase "connected with the rearing of live-stock" has a different character. Its construction does not merely involve the identification of some activity. The words "connected with" are capable of describing a spectrum of relationships ranging from the direct and immediate to the tenuous and remote. As Sheppard and Burchett JJ observed in Australian National Railways Commission v. Collector of Customs (supra) at 378, the meaning of the word "connection" is wide and imprecise, one of its common meanings being "relation between things one of which is bound up with, or involved in, another" - Shorter Oxford English Dictionary. Although the words of the statute are construed according to their ordinary English meaning, that does not mean that their application to a set of facts is simply described as the matching of that set of facts with a factual description. There is necessarily a selection process involved. The range of relationships to which the words apply for the purpose of the Act depends upon a judgment about that purpose. The selection process involved is analogous to that used in determining what causal relationships between conduct and loss attract liability for the purpose of s.82 of the Trade Practices Act (1974) (Cth) - see Elna Australia Pty Ltd v. International Computers (Aust) Pty Ltd (No. 2) (1987) 16 FCR 410 at 418-419; Munchies Management Pty Ltd v. Belperio (1988) 84 ALR 700 at 712-713. In the end this is not a process of fact finding. The facts are found. What is left is a value judgment about the range of the Act and that is a question of law.

Approach to Construction
29. Section 164 of the Customs Act 1901 in its present form and s.78A of the Excise Act 1901 were enacted by the Diesel Fuel Taxes Legislation Amendment Act 1982 (Cth). That Act was part of a package of measures which, according to the Explanatory Memorandum to the Diesel Fuel Tax Amendment Bill (No. 1) 1982 was designed to:

"introduce...a new system providing for rebates of duty paid on diesel fuel used for 'off-road' purposes by persons engaged in the agriculture, mining, forestry and fishing industries."

1. The exemption from duty for off-road uses of diesel fuel in the designated industries was not new. Prior to 1982 there had been customs and excise by-laws in force under which off-road users of diesel fuel could obtain fuel at duty free prices upon production of a diesel fuel certificate. Under the new scheme persons who purchase diesel fuel pay prices inclusive of duty and apply for rebates subsequently. To that extent the new scheme is more favourable to the revenue than its predecessors. The "overriding qualification for rebate" as described in the Second Reading Speech is that the fuel in respect of which rebate is claimed is used otherwise than for the purpose of propelling a road vehicle on a public road. The rebate provisions are intended to encourage the activities to which they apply. They should not be construed narrowly - Collector of Customs v. Cliffs Robe River Iron Associates (supra) at 275. The rebates are not payable only to persons who are themselves directly engaged in activities supported by the legislation - Australian National Railways Commission case (supra) at 377. In the case of primary production, the rebate is payable to a person who purchases diesel fuel for use by that person in primary production. The condition that the use be by that person in primary production is satisfied if it is for use by that person in agriculture. And that condition is satisfied if it is purchased for use by him in operations connected with the rearing of live-stock (s.164(7)(c) and (f)). As Sheppard and Burchett JJ said in the Australian National Railways Commission case, the rebate is payable where a primary producer engages a contractor to carry out work connected with primary production and the contractor uses diesel fuel in operating the plant necessary for the task.

The Rebate Attracting Purpose
31. The requirement that the fuel be purchased by the person claiming rebate "for use by him...in primary production" is a requirement that must be satisfied at the point of purchase. It is a requirement which can only be met if the fuel for which rebate is claimed is purchased with the purpose of applying it to one of the exempted uses. The actual use to which the fuel is put subsequently can be evidence of the purpose for which it was purchased. But that does not exclude inquiry of the consignor or consignee about their objective intentions - Australian National Railways Commission case (supra) at 379. That subsequent use may support inferences about prior purpose in a somewhat analogous context of sales tax exemption is indicated by Deane J in Deputy Commissioner of Taxation v. Stewart (1984) 154 CLR 385 at 401. In the present case it is not in dispute that the diesel fuel purchased was purchased partly for the purpose of transporting the stock feed and partly for the purpose of unloading it into the silos. The fact that only a proportion of the fuel so purchased was intended for that use and the fact that it might not be precisely quantified at the point of sale does not take the purchase outside the rebate provisions. So long as there is some means of establishing that a proportion of the fuel is to be used for an exempt purpose, the precise quantification can await the actual use. In the present cases it appears to be common ground that if the rebate entitlement is established as a matter of law, then the precise quantum can be agreed.

1. His Honour did not embark upon any explicit analysis of the purpose or purposes for which the fuel used by Pozzolanic and Pressure Tankers Pty Ltd was purchased. He accepted that the operation of unloading could be said to have a dual character as both the last step in the process of transporting grain feed from miller to farmer and as the first step in the process of feeding the stock. That dual characterisation did not deny the rebate. His Honour focussed entirely upon the use to which the fuel was put in operating the power take off to the rotary valve trailer or tipper as the case might be. Strictly speaking, what was required was identification of the intended use at the point of purchase. For the reasons outlined earlier however, the existence of multiple purposes will not defeat a claim for rebate even if the quantity of fuel to which the rebate applies remains to be identified at a later time. That approach is consistent with the commonsense and commercial approach to construction urged by Ryan and Cooper JJ in Abbott Point Bulk Coal Pty Ltd v. Collector of Customs (supra) at 378 and the broad construction consonant with the beneficial purpose of the legislation mandated by Collector of Customs v. Cliffs Robe River Iron Associates (supra). Although his Honour addressed only end use in these cases it was plain and not disputed that the end use of unloading the grain into the silos reflected one of the purposes for which, in all probability, the fuel was purchased. There was no material error in this aspect of his Honour's reasoning. The central question remains, however, whether the end use, and therefore the intended use, of the fuel so far as it related to the unloading operations attracted the rebate.

The Question of Connection
33. Although the concept of proximity was mentioned in the submissions and referred to in the judgment of Beaumont J in Collector of Customs v. Davis (supra), it is a metaphor which is strictly unnecessary as a tool of analysis in cases involving the question whether some fuel consuming operation is connected with the rearing of live-stock. The term "connected with" no doubt requires consideration of spatial, temporal, economic and mechanical factors. The set of factors that bear upon the issue is open. Proximity in this context is an artefact of thought. Whatever its utility in other areas of the law, it is unnecessary for the present exercise and risks complicating what is an essentially simple evaluative process.

1. His Honour made a judgment about the relationship between the unloading process and the feeding of live-stock which led him to conclude that one was connected with the other in the sense contemplated by the legislation. Certainly the two operations are connected. The question is whether they are connected to the extent contemplated by the Act. The Tribunal thought not. It expressed its conclusion in a practical and straight forward way:
   

"We believe that, having regard to the evident purpose of the legislation, and taking a commonsense and commercial approach, the unloading of the feed from the trucks to the silos is part of the process of manufacture, distribution, haulage and delivery of stock feed."

1. The Tribunal related this characterisation to the purpose of the legislation when it said later in the reasons:
   

"The payment of a rebate of duty in the circumstances of this case may help in some small degree to promote the manufacture and distribution of the applicant's stockfeed but it is stretching commonsense to say that it would promote primary production. We have taken the view that the applicant is not an entity which has purchased diesel fuel for use by it in primary production. The fuel was purchased for use in the manufacture, distribution and delivery of stockfeed. The operation the subject of this review is part of that distribution and delivery process. It is not sufficiently connected to the rearing, of livestock to bring it within the definition of 'primary production'."

1. That view was one which, in our respectful opinion, was reasonably open to the Tribunal. We would go further and say, having regard to the purpose of the legislation, that the characterisation of the unloading operation adopted by the learned primary judge was not reasonably open. We do not consider, in the circumstances, that the Tribunal's decision should have been set aside. For these reasons, the appeals must be allowed with costs.